Despite headwinds from Covid-19, and a 10 percent decline for Ugg, robust sales at Hoka One One helped Deckers Brands grow in its first fiscal quarter ended on June 30. They progressed by 2.3 percent from the same period last year to $283.2 million, or by 2.8 percent in constant currencies. It posted a net loss of $7.0 million, compared with a net loss of $19.6 million last year.
Deckers Brands maintained a robust liquidity position of over $1.1 billion between its cash balance and available borrowings under its credit facilities.
The company’s distribution center in California is operational, with slightly limited capacity due to distancing guidelines. As a result, the management believes that the company may experience some challenges during peak shipping demand in its second quarter and early in the third quarter. During the first quarter, about 20 percent open for the entire 90-day period. As of this week, approximately 95 percent of the fleet is now open.
In the quarter, the shining star was Hoka One One, with sales jumping by 37.1 percent to $109.0 million, including gains from both wholesale and direct-to-consumer (DTC), driven by e-commerce, and helped by rapid international distributor expansion.
But for the group’s biggest brand, Ugg, sales dropped by 10.0 percent to $124.7 million in the quarter, weighed down by Covid-19 restrictions, with wholesale down by 49 percent, while DTC jumped by 53 percent driven by e-commerce. Ugg sales gained in the U.S. but declined overseas.
Sanuk and Teva also dropped, by 29.2 percent to $13.2 million and by 7.9 percent to $35.2 million, respectively.
Overall, Deckers’ wholesale revenues contracted by 27.1 percent to $143.3 million, while direct-to-consumer sales rose by 74.2 percent to $139.8 million.
U.S. sales progressed by 10.2 percent to $184.3 million. However, the international business lost 9.7 percent to $98.9 million.
Deckers’ gross margin improved by 3.3 percentage points to 50.3 percent, thanks to a greater proportion of direct sales, and fewer closeouts.
Deckers did not provide a guidance for the full year, due to the uncertainties caused by the coronavirus pandemic, but it did say that total revenues were likely to decline this year. It also warned that cancellations would outnumber reorders for the rest of the year.